Bolivia Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

In 2013, the EU renewed Bolivia’s provision of tariff preferences (SGP+), under which Bolivia can export 90% of its exports duty-free. Although Bolivia is in this preferential system, Bolivian entrepreneurs do not take advantage of this opportunity, for example due to ignorance of the conditions for importing into the EU, non-fulfillment of import requirements, insufficient production and high transport costs. Even so, the EU is Bolivia’s 4th most important trading partner. The most important EU export items to Bolivia are: machinery and equipment, means of transport, chemical products, optical and photographic equipment The most important EU import items from Bolivia are: ores and other minerals, fruit and vegetables, food products, tobacco, beverages, metals.

  • Allcountrylist: Overview of major industries in Bolivia, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 960.5 733 620.8 394.5 550.9
Imports into the EU (million EUR) 518.2 647.9 603.6 537.9 848
Balance with the EU (million EUR) -442.2 -85.1 -17.2 143.4 297.1

Source: European Commission

Trade relations with the Czech Republic

Given the state and character of the Bolivian economy, there are not many business opportunities for CZ companies. The importance of the Bolivian market is completely marginal for the Czech Republic. Trade exchange is minimal, its structure is relatively unchanged for a long time. It cannot be expected that the situation would change in the foreseeable future and there would be a significant increase in interest in Czech products, or on the other hand, an increase in the interest of Czech exporters in Bolivia. This situation is mainly caused by the degree and character of the development of the Bolivian economy, as well as the low purchasing power of the local population.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0 0.1 0.2 0.1 ON
Imports to the Czech Republic (billion CZK) 0.3 0.1 0 0.1 ON
Balance with the Czech Republic (billion CZK) 0.3 -0.1 -0.1 -0.1 ON

Source: CZSO

Trade relations with countries outside the EU

Bolivia’s largest trading partners are Brazil and Argentina. In the last two decades, Bolivia has become the main exporter of natural gas (43% of total exports). Other exports include: silver (12% of total exports), zinc (10%) and soybeans and related products (7%)

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 5,708.6 6,887.3 6,882.8 5,515.9 8,539.9
Imports to countries outside the EU (million EUR) 7,375.8 7,848.7 7,747.0 5,509.9 7,210.3
Balance with non-EU countries (million EUR) -1,667.2 -961.5 -864.1 6 1,329.6

Source: EIU, Eurostat

Foreign direct investment

In 2020, FDI reached 165 million. The reason was not only the economic situation caused by the pandemic, but also the political development in the country in recent years. Since 2012 (roughly USD 2 billion), FDI has been gradually declining. The economic recovery in 2021 brought an increase in FDI in net terms of around USD 600 million. USD. In its report, the central bank of Bolivia explains the negative balance from 2020 mainly by the outflow of capital from mining companies. The largest share of gross FDI flowed into manufacturing ($382 million), mining ($296 million), hydrocarbon extraction ($186 million), trade ($75 million), and financial services ($68 million). The largest volume of investment in 2021 came from Sweden ($286 million), in the mining and processing industry, followed by Peru ($250 million) and Spain ($190 million).

Although the current government of Luis Arce promises to restore political stability, Bolivia is generally not one of the countries that is very open and suitable for FDI. The main reasons include weak legal protection, especially regarding property rights, a complex regulatory framework, corruption and an excessive level of bureaucratic obstacles. The 2009 Constitution strengthened the influence of the state in strategic sectors and especially in the management of mineral wealth. The former president Evo Morales thus nationalized companies in the mining, energy and telecommunications sectors. The nationalization of property is thus constitutionally guaranteed, as can the seizure of land. It is also quite complicated to set up a business in Bolivia and to understand the tax system, which contains many exemptions.

FDI from the Czech Republic to Bolivia is unknown.

FTAs and treaties

Treaties with the EU

The EU’s relations with Bolivia are developing bilaterally and also through cooperation with the Andean Community (CAN), which is based on the Agreement on Political Dialogue and Mutual Cooperation of 2003. Bolivia has become part of the Multilateral Trade Agreement between the EU, Peru, Colombia and newly and by Ecuador in accordance with the conditions set forth in Article 329 of this Agreement. The European Parliament approved the GSP+ system of preferential tariff rates for Bolivia, under which Bolivia can export 90% of its export items to Europe from January 1, 2014.

Contracts with the Czech Republic

Agreement on cultural cooperation, signed in Prague on 24/06/1985 (in force from 24/08/1990) Agreement on the abolition of the visa requirement for holders of diplomatic and service passports, signed in Prague on 03/09/1991 (in force from 18/09 1991) Abolition of the visa requirement for tourist trips by citizens of the Czech Republic (effective from 1 October 2003) As part of the negotiations on the accession of the Czech Republic to the EU, the Czech Republic terminated those international agreements that were not in accordance with the acquis in the pre-accession period. These agreements included the 1973 Agreement on Scientific and Technical Cooperation with Bolivia.

Developmental cooperation

In December 2021, the Multiannual Indicative Program (MIP) for the period 2021-2027 was approved, which sets the goals and priorities for the European Union’s support for sustainable development in Bolivia for the coming 7 years. Within this framework, Bolivia remains one of the main beneficiaries of the EU’s bilateral development assistance in Latin America through grants of a total indicative maximum amount of EUR 104 million for the initial period 2021-2024.

The EU MIP is in line with the national development strategies of the Bolivian government (Patriotic Agenda 2015-2025 and Economic and Social Development Plan 2021-2025). It is also embedded in the wider Joint European Strategy for Bolivia – 2022-2025 (JES), which provides a strategic framework agreed by all European actors present in Bolivia (Team Europe+) to improve joint impact, coordination and visibility.

The EU’s international partnership with Bolivia represents common priorities along with the following objectives:

– Contribute to a successful green and sustainable global economic recovery, linking investments with the 2030 Agenda and the Paris Agreement;

– fighting inequality by building more inclusive and sustainable and digital economies and societies, promoting human development with a special focus on women and young people: priority area 1.

– Promoting human rights and democracy, good governance and the rule of law, as well as contributing to peace and security: priority area 2.

Accordingly, the two priority areas under the MIP for the period 2021-2027 are:

Priority area 1

– Environment, climate change and inclusive economic development

Sector 1. Sustainable environmental management and disaster risk reduction

Sector 2. Water, sanitation and solid waste management

Sector 3: Integral Rural Development

Priority area 2

– Governance and human rights

Sector 1: Rule of law, democracy and human rights

Sector 2: Combating corruption and the illegal drug trade

Interventions in these priority areas will contribute to the 2030 Agenda and put into practice the EU’s approach to financing sustainable development and eradicating poverty, as defined at the Addis Ababa conference in 2015.

The MIP reflects the EU’s overarching strategic political priorities and EU values: the Green Deal, including climate change and the environment, inclusive sustainable growth with decent jobs, governance, peace and security, including human rights, democracy and the rule of law. All this represents the basis of common interests and priorities between the EU and Bolivia.

Prospective fields of study (MOP)

Due to the nature and size of the local economy, the classic Map of industry opportunities is not processed for Bolivia.

In recent years, specific interest in contacts with Bolivian companies on the part of Czech exporters has been minimal, as well as on the part of Bolivian entrepreneurs in contacts in the Czech Republic. The situation was also complicated on the Bolivian side by persistent problems regarding the legalization of Czech documents. Since May 2018, however, it is sufficient to verify the documents of Czech companies with an apostille clause. This should gradually normalize the situation.

Bolivia is a country with an open economy, however political and economic instability limits market opportunities. Based on Bolivia’s internal policy, in which the state seeks to control key sectors of the economy, the attractiveness of the country for foreign investors and those interested in business development is decreasing. Interventions in the legal framework for the regulation of the oil sector have reduced its attractiveness, similar to what happened in the case of the mining industry. The new mining and metallurgical law is intended to help restore the confidence of foreign investors. Possibilities are open especially when foreign interested parties are willing to create joint-ventures with Bolivian partners while respecting their majority share.

The Bolivian market is relatively unsaturated in all sectors, with a consumer potential of 1million inhabitants, whose purchasing power is however weak. Gas extraction, mining, textile, leather and food industries are more developed, but even for these segments machinery must be imported. The Bolivian government is trying to attract large investors, especially in sectors related to mining, which represent the main source of income for the state coffers. The main goal is to intensify exploration activities that would lead to the discovery of new deposits.

Due to the insufficient production base (and underdeveloped infrastructure), Bolivia is forced to import almost all industrial products.

Undoubtedly, an interesting market would be found in Bolivia for trucks (tippers, flatbeds with special superstructures, suitable for earthworks during the construction of infrastructure), but also cars, tractors, etc. There would be interest in these commodities from local merchants and users, however, it is necessary expect competition from other interested parties. In the past, contacts were established between Bolivian interested parties and Avia-Daewoo, as well as with Tatra from Kopřivnica, whose interests were represented by the company Skobol sa, however, the expansion of Czech trucks is hindered by the inability of the importer to offer an extensive service and sales network and, in particular, financial products facilitating purchases (leasing).

From engineering production, it would be possible to offer machine tools, tools and implements, bearings, compressors, pumps, household appliances, measuring devices, machines for the mining industry, agricultural machines, etc. can be applied. Recently, there is a noticeable interest in Czech weapons and ammunition. As in neighboring Peru, the demand for high-quality measuring devices and equipment for medical facilities is gradually growing in Bolivia.

With a good business strategy, the products of the chemical industry (laboratory and industrial chemicals, equipment for the cosmetic and pharmaceutical industry, explosives, cyanides, dyes, etc.), laboratory and technical glass could find a market in Bolivia. Construction is also a sector that has been developing very dynamically in recent times. Therefore, Bolivia very urgently needs the participation of foreign companies that would be able to cooperate in this development.

One of the possibilities of Czech-Bolivian cooperation in the economic field could be the participation of Czech companies in the Boliviamar project. It is a whole series of projects aimed at the industrialization of an area of ​​200 km2 in the vicinity of the Peruvian port of Ilo, which was provided to Bolivia by Peru on the basis of a bilateral agreement. A very interesting project is the planned construction of a gas pipeline to Ilo, where the gas would be liquefied and further exported (e.g. to Asia).

There are also wide possibilities for the application of Czech products in the field of civil protection and in potential supplies for the Bolivian army and police. Other areas for trade development are infrastructure and electricity generation (hydro and thermal power plants).

In 2012, a project was launched to build two medium-sized hydropower plants – the first in La Paz with a capacity of 400 MW and the second in Cochabamba with a capacity of 200 MW. At the same time as these large projects, projects for the construction of small gas-fired thermal power plants are being developed, in this sector Bolivia is cooperating with the German company Siemens. However, the sector of building small hydropower plants is open to any other interested parties. Potential interest exists in rural electrification. So far, 96% of the region has been covered (through 22 projects). The remaining 4% is the most demanding in terms of geographical extremes, cannot be connected to the public electricity grid due to the distances and will require a solution based on autonomous energy sources (for the coming period a total of 20 projects of 4-10 MW each) using alternative energy.

Bolivia Trade